Record im­ports push U.S. trade gap to $55.5 bil­lion

The Prince George Citizen - - Money -

WASH­ING­TON — Record im­ports in Oc­to­ber drove the U.S. trade deficit to the high­est level in a decade.

The Com­merce De­part­ment said Thurs­day that the gap be­tween the United States sells and what it buys from for­eign coun­tries hit $55.5 bil­lion in Oc­to­ber, the fifth straight in­crease and high­est since Oc­to­ber 2008.

The po­lit­i­cally sen­si­tive deficit in the trade of goods with China rose 7.1 per cent to a record $43.1 bil­lion. The goods gap with the Euro­pean Union widened 65.5 per cent to a record $17.6 bil­lion.

Led by ship­ments of medicine and cars, over­all im­ports rose 0.2 per cent to a record $266.5 bil­lion. Ex­ports fell 0.1 per cent to $211 bil­lion.

Pres­i­dent Don­ald Trump cam­paigned on a pledge to slash Amer­ica’s long-stand­ing trade deficit with the rest of the world. De­spite his im­port taxes on steel, alu­minum and Chi­nese goods, the deficit so far this year is run­ning 11.4 per cent above Jan­uary-Oc­to­ber 2017.

U.S. ex­ports of soy­beans, tar­geted for re­tal­ia­tory tar­iffs by China, dropped 46.8 per cent in Oc­to­ber.

Trump sees the lop­sided trade num­bers as a sign of U.S. eco­nomic weak­ness and as the re­sult of bad trade deals and abu­sive prac­tices by U.S. trad­ing part­ners, es­pe­cially China.

He has slapped tar­iffs on $250 bil­lion worth of Chi­nese im­ports in a dis­pute over the tac­tics Bei­jing is us­ing to chal­lenge Amer­i­can tech­no­log­i­cal supremacy. These in­clude the theft of trade se­crets and forc­ing U.S. com­pa­nies to hand over tech­nol­ogy in ex­change for ac­cess to the Chi­nese mar­ket, the U.S. charges.

In a meet­ing over the week­end, Trump and Chi­nese Pres­i­dent Xi Jin­ping agreed to a cease­fire in the trade dis­pute. De­tails are un­clear, but the White House says it agreed to de­lay a planned tar­iff in­crease on $200 bil­lion in Chi­nese goods for 90 days to buy time for more sub­stan­tive ne­go­ti­a­tions.

Main­stream economists view trade deficits as the re­sult of an eco­nomic re­al­ity un­likely to yield to changes in trade pol­icy: Amer­i­cans buy more than they pro­duce, and im­ports fill the gap. The strong U.S. econ­omy also en­cour­ages Amer­i­cans to buy more for­eign prod­ucts.

U.S. ex­ports are also hurt by the Amer­i­can dol­lar’s role as the world’s cur­rency. The dol­lar is usu­ally in high de­mand be­cause it is used in so many global trans­ac­tions. That means the dol­lar is per­sis­tently strong, rais­ing prices of U.S. prod­ucts and put­ting Amer­i­can com­pa­nies at a dis­ad­van­tage in for­eign mar­kets.

In Oc­to­ber, the U.S. ran a $22.6 bil­lion sur­plus in the trade of ser­vices such as bank­ing and tourism. But that was off­set by a record $78.1 bil­lion deficit in the trade of goods such as cell­phones and ma­chin­ery.

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